Dexus could launch a new real estate fund following its first move into the healthcare sector earlier this year, its CEO suggested today.
Darren Steinberg, who oversees the Australian fund manager, said a private hospital it is building in Sydney might not be held on its balance sheet.
Announcing Dexus’ results for the 2015-16 period, during which the company increased its funds under management 17% from AUD9.6bn (€6.5bn) AUD11.2bn, Steinberg said the project could be used to seed a new fund, although he offered no details.
Currently, the asset is listed on its trading pipeline of five assets.
It is understood Dexus has already secured an agreement for a long-term lease with a major operator for the health facility it is developing with Ramsey Health Care in the St Leonards area of Sydney.
Dexus has received local council support for the project, which will add further amenity to the medical precinct, centred around the adjoining North Shore Hospital, a major teaching hospital.
Steinberg told IPE Real Estate separately that the group is constantly talking to potential new capital partners. Its existing partners are also potential investors for new opportunities.
He added: “We are open to new opportunities across both traditional and alternative sectors.”
The company declines to name its investors, but IPE Real Estate understands existing investors include the Netherlands’ APG Korea’s National Pension Servoce, and the Government Pension Fund of Thailand.
Steinberg said investor demand is expected to continue as investors seek the secure yields and defensive nature of quality assets.
The unlisted Dexus Wholesale Property Fund (DWPF) raised AUD658m in fresh equity and attracted 10 new investors in the past financial year, Steinberg said.
He said the DWPF achieved a one-year total return of 14.7% and outperformed its benchmark over one, three, five and seven years.
The DEXUS Office Partnership, run in conjunction with Canada Pension Plan Investment Board, delivered an unlevered one-year total return of 17.7% and an annualised 14.6% unlevered total property return since inception in April 2014.
The group’s listed office portfolio of AUD9.2bn enjoyed a revaluation gain of AUD769m in the last financial over the prior year – on the back of its record year of leasing.
Steinberg expected prime cap rates to tighten a further 15-25bps over the next 12 months as demand for premium office space, especially in Sydney, continues to strengthen.
The listed vehicle delivered an operating profit of AUD673m – a 6% uplift over the previous year and 9.2% increase in distribution to security holders.